Friday, May 20, 2022

Samsung applies for sops worth Rs.900 crores under PLI handset Scheme

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Samsung is the only company amongst 16 other companies to have successfully met its FY21 target under the production-linked incentive(PLI) scheme for handsets, as a result, the South Korean giant has applied for the highest possible sops amounting to nearly 900 crore INR.

“Samsung has hit the ceiling of Rs.15,000 crore worth of production of phones priced over Rs.15,000(factory value) during the year(ender March 2021) and exported phones worth about Rs,13,850 crores,” a person directly aware of the matter said.

The PLI Scheme offers graded incentives or cashback, worth 6% of the incremental sales of goods achieved over the base year for the first two years each, 5% for the third and fourth year, and 4% for the fifth year.

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The 6% cashback translates to 900 crore INR for Samsung, to qualify for these, other global companies such as Samsung need to produce incremental goods worth Rs.4,000 crore, Rs.8,000 crore, Rs.15,000 crore, Rs.25,000 crore, and Rs.50,000 crore respectively over 5 successive years.

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According to the guidelines, the annual ceiling on the incentives payable to each applicant is to be determined on the basis of financial outlay and the number of eligible applicants in each of the target segments.

The total outlay for the first year for all 16 applicants was fixed at 5,334 crore INR.

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Samsung India Electronics Ltd’s FY20 standalone net profit was 2,902.30 crore INR on revenue of 78,651.20 crore INR, as per data provided by business intelligence firm Tofler.

The company gets around 70% of its India revenue, or nearly 55,000 crore INR from the mobile phone segment. The company’s India revenue from mobile phones for FY21 is also in the same range, said people familiar with this matter.

Apart from Samsung, India’s second-largest smartphone maker by shipments is Government approved Foxconn units Hon Hai and Rising Star, and iPhone makers Wistron and Pegatron to receive incentives for the segment for global companies.

The remainder of the approved applicants includes homegrown companies such as Lava, Micromax, Padget Electronics, UTL Neolyncs, and Optiemus Electronics. India’s largest smartphone manufacturer is Xiaomi.

Originally, the first year of production under the scheme was to be FY21, and it was to end in 2024-25 but the industry pushed the government for a year’s extension due to the pandemic.

The Government acceded to the handset makers demands in July and allowed them an extension of the scheme by a year to 2025-26, the government allowed flexibility in choosing any five years out of the six, from FY21 to FY26 to claim incentives, thereby allowing Samsung to claim sops for FY21. The others have chosen FY22 as their first year.

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